Open Source Blog

Red Hat customers: "show me the money"
December 11, 2006

It seems Pacific Crest and First Albany have been out surveying Red Hat customers to see whether they would be inclined to migrate away from the company's Linux support in the light of Oracle's cheaper service and Novell's patent peace with Microsoft.

The results are inconclusive. First Albany says Red Hat's customers will likely remain loyal, while Pacific Crest says Red Hat's customers have a price.

CRN has the details of the First Albany survey:

"First Albany surveyed 54 Red Hat customers for their views on Oracle's offering and found little interest. Five percent of respondents considered Oracle's "Unbreakable Linux" offering intriguing, while 59 percent said they would never consider switching under any circumstances. (Of course, even those not seriously evaluating Oracle's service are willing to use it as leverage against Red Hat: 31 percent of First Albany's respondents said they plan to use Oracle as a bargaining chip in price talks with Red Hat.) Only one of those polled in the study planned to fully switch from Red Hat's support to Oracle's.

"Asked which vendor provides better support, half sided with Red Hat while 4 percent named Oracle, with 46 percent saying they're both comparable."

Meanwhile Barrons has the details of the Pacific Crest survey:

"Red Hat customers are mulling their options. But they can be bought. That’s one of the takeaways from a fascinating report today from Pacific Crest’s Brendan Barnicle based on a survey he did of 118 enterprise operating system buyers, including 86 Red Hat support customers. The goal of the survey was to see how Linux users are responding to the new offerings from Oracle and the Microsoft/Novell partnership.

"Reading the results of the study, you reach several conclusions. One, most customers are seriously considering the new offerings. Two, Red Hat can hold on to most of them, if they are willing to cut prices far enough. And three, customers seem a little more interested in the Microsoft/Novell offerings than those from Oracle.

"Here are a few details:

- Asked whether they would consider switching from their current Linux support provider to Oracle, 26% said they definitely would not; 29% said they definitely would consider it. For Microsoft/Novell, 17% would definitely not consider switching, 27% definitely would consider it.

- Asked who they would chose as a provider if they were to switch Linux support, 29% of Red Hat customers named Microsoft/Novell; 20% named Oracle.

- The survey asked, what price discount would your current provide have to offer to keep you as a customer. Among Red Hat customers, 31% said they would need a discount of 50%-74%; 37% said they want a discount of 25%-49%; 27% said they would stay for a discount of 1%-24%.

- The survey asked, how important would a discount be in order to keep you as a customer? Among Red Hat customers, 64% said 'very important.' Just 3% said 'not at all important.'"

What can we learn from these two apparently contradictory surveys? It's all about the Benjamins. Two figures stood out for me, from First Albany: "31 percent of First Albany's respondents said they plan to use Oracle as a bargaining chip in price talks with Red Hat", from Pacific Crest: "31% said they would need a discount of 50%-74%" to stay loyal.

I'd say the message to Red Hat is pretty clear.